Union Trust Co. v. Tyndall

Smith, J., delivered the opinion of the Court. We granted the writ of certiorari in this case in order that we might resolve conflicts said to exist among circuit courts (on appeal from the District Court) as to whether the assignee of a seller under Maryland’s Retail Installment Sales Act, Code (1975, 1977 Cum. Supp.) §§ 12-601 to 12-636, Commercial Law Article (the Act), is entitled after a sale pursuant to § 12-626 to recover the full finance charge to the original date of maturity of the contract or whether the finance charge must be recomputed as is done under § 12-620 in the event of a prepayment. We hold to the latter view.

Hence, we shall affirm. On July 27, 1977, appellee Alfred Tyndall purchased a 1977 Oldsmobile. At that time he executed an installment sale agreement which was assigned to appellant, Union Trust Company of Maryland. Since the cash price of $7,925.42 was less than the $12,500 amount specified in § 12-601 (j), the transaction was subject to the Act.

To the cash price was added certain insurance and other costs permitted under the Act. This brought the amount financed or the unpaid balance to $9,757.98. The contract was to be paid in forty-eight monthly installments. Hence, a finance charge of $3,317.70 was added.

The annual percentage rate was stated as 15.17%. After making his first payment almost one month late, Tyndall paid each month up through May 1978, but not on time. He said he found himself unable to meet the payments. Accordingly, a surrender was arranged on July 27,1978, when he executed a voluntary repossession agreement.

A private sale of the vehicle to the highest of three bidders was effected. Union Trust charged him for ¹⁰⁴ storage fees of $46 and allowed him life and health insurance rebates totalling $595.39. It then computed the balance due under the contract as $4,874.60. Union Trust filed suit against Tyndall in the District Court.

It claimed $4,874.60 plus attorney’s fees of $731.19 (15%). Tyndall was not represented by counsel. Without giving notice of intention to defend and demand for proof as required by Maryland District Rule 302, he appeared in court objecting to the claim. He stated, "[T]hey sold the car for what — the money that was borrowed.

But they charged me with the interest.” The matter was rescheduled for trial. At that time Judge Kardash refused to allow the full amount of the claim. He relied, in part, upon an earlier decision of his which had been affirmed on appeal in the Circuit Court for Baltimore County in an opinion by Chief Judge Raine. Judge Kardash said, "[T]he court holds that when you take that chattel and sell it, the contract is then at an end, and all you are entitled to is the interest as of the date of sale that has been earned.

I can’t make it any plainer than that.. . .” Union Trust appealed to the circuit court. There Judge Sfekas filed a well-reasoned opinion in which he quoted from the earlier opinion by Judge Raine, to which we have referred, and cited and quoted from Block v. Ford Motor Credit Company, 286 A.2d 228 (D.C. 1972). The latter case involved a Maryland contract. The District of Columbia Court of Appeals applied what it understood would be Maryland law were the decision before us.

Judge Sfekas said, "[T]he bank is entitled to receive only the finance charge it earned as of the date of the sale, the event which terminated the contract.” Union Trust in its petition for the writ of certiorari represented to us that the decision in the District Court was contrary to that rendered by another judge in the same county and contrary to District Court decisions in Baltimore City, Anne Arundel County, Carroll County, Harford County, Howard County, Prince George’s County, and Montgomery County. We granted the writ that we might finally decide the matter. ¹⁰⁵ In reaching our decision here we shall to a large degree be guided by the principles of statutory construction. Hence, we note those applicable to this case which were set forth in Police Comm’r v. Dowling, 281 Md. 412, 418-19 , 379 A.2d 1007 (1977). They are that the cardinal rule of statutory construction is to ascertain and carry out the real legislative intent; in determining that intent the Court considers the language of an enactment in its natural and ordinary signification; a corollary to this rule is that if there is no ambiguity or obscurity in the language of the statute, there is usually no need to look elsewhere to ascertain the intent of the General Assembly; a court may not insert or omit words making a statute express an intention not evidenced in its original form; absent a clear indication to the contrary, a statute, if reasonably possible, is to be read so that no word, clause, sentence or phrase is rendered surplusage, superfluous, meaningless, or nugatory; and the General Assembly is presumed to have had, and acted with respect to, full knowledge and information as to prior and existing law and legislation on the subject of the statute and the policy of the prior law.

A number of cases were cited in Dowling in support of those propositions. See also Vallario v. State Roads Commission, 290 Md. 2 , 426 A.2d 1384 (1981); Department of Public Safety v. LeVan, 288 Md. 533, 544-45 , 419 A.2d 1052 (1980); Dorsey v. Beads, 288 Md. 161, 175-76 , 416 A.2d 739 (1980); and Messitte v. Colonial Mortgage Serv., 287 Md. 289, 293-94 , 411 A.2d 1051 (1980). The Maryland Retail Installment Sales Act was enacted by Chapter 851 of the Acts of 1941, possibly as a result of the research paper on "Retail Instalment Selling” prepared by Charles Mindel, Esq., and submitted to the Legislative Council in September 1940. In the intervening forty years the Act has been before this Court but very few times.

The Act obviously is to protect unsophisticated buyers. Under § 12-605 at or before the time when the buyer signs an installment sale agreement the seller shall deliver to him an exact copy of it. If the seller does not sign the copy and if within fifteen days after the buyer signs the installment sale ¹⁰⁶ agreement the seller does not deliver to the buyer a copy of it signed by the seller, the installment sale agreement and the instruments signed by the buyer are void without any action by the buyer. The seller then is required immediately to refund to the buyer all of his payments and deposits.

Until the buyer signs such an agreement and receives a copy of it signed by the seller, he has an unconditional right to cancel it and to receive immediate refund of all payments and deposits made under the contract. His request for the refund operates as a cancellation of the agreement. An acknowledgment of delivery of a copy of the agreement is required to be printed on the contract in 12-point type or larger. A number of items are required by § 12-606 to be disclosed in the agreement.

These include the names and addresses of the parties; the cash price; all charges for delivery, installation and repair of or other services to the goods which are included in the installment sale agreement and which are separate from the cash price; the amount of the down payment; description of all goods sufficient to identify them; the cost to the buyer of any insurance; the amount or extent of the insurance; the expiration date of the insurance; the party to whom the insurance is payable; if the goods sold include a motor vehicle, a definite statement in 12-point bold type or larger as to whether the insurance includes coverage for personal liability for property damage caused to others; the principal balance owed; the finance charge stated as a sum in dollars; the time balance owed; and a statement as to any collateral security taken for the buyer’s obligation. That section requires a notice to the buyer "in 12-point bold type or larger, directly above the space reserved in the agreement for the signature of the buyer” of the fact that he is entitled to a copy of the agreement at the time he signs it and certain of his rights, including the right "[t]o require, under certain conditions, a resale of the property, if repossessed.” Section 12-607 enumerates a number of provisions not allowed in installment sale agreements. These include blank spaces to be filled in after the agreement is signed (other than "further serial numbers or other identifying marks on ¹⁰⁷ the goods [to] be inserted in the agreement on delivery of the goods”), authority to confess judgment, an assignment or order for payment of wages, and "|a| provision for repossession of the goods or for the acceleration of the time when any part or all of the time balance becomes payable, if the condition of the repossession or acceleration is that the holder considers himself insecure... .” (Emphasis added.) Limitations on the amount of the finance charge which may be imposed on the sale of a motor vehicle are set forth in § 12-609. At the time applicable to this transaction the finance charge on a new motor vehicle was limited to "$9 per $100 per year on the principal balance .. . .” The maximum finance charge for consumer goods is set forth in 8 12-610.

The method of computing finance charges is specified in 8 12-611. A buyer of consumer goods is granted by 8 12-612 the right to "prepay at any time, without penalty, all or part of the outstanding balance . .. .” The section then states that if a buyer pays the balance in full before maturity, "the holder immediately shall refund to him a portion of the finance charge .. ..” It then goes on to provide for the method of computation of the refund. Insurance is covered in 8 12-613. Subsection (c) requires that a copy of the insurance policy or the owner’s certificate together with certain information relative to the charges be delivered or mailed to the buyer within twenty-five days after the delivery of the goods.

Then subsection (f) states that if the seller or the assignee does not comply with the requirements of subsection (c), the buyer may deduct from the amount of any payment the full amount charged to him for the insurance. If he does not do that the holder is required to credit the amount charged against the last installment or installments under the agreement. Section 12-614 forbids the holder of the agreement from "directly or indirectly” contracting for or charging a buyer additional sums or fees except as specified in that section for such things as court costs and expenses in recovery of possession of the goods. ¹⁰⁸ If in addition to his down payment a buyer is required under an installment sale agreement to make a payment to the seller before the seller is obliged to deliver the goods sold, then § 12-615 (a) states that "the buyer may cancel the installment sale agreement before delivery or tender of the goods by the seller” with a requirement on the seller to refund to the buyer within ten days after notice of the cancellation an amount equal to at least 90% of all payments made by the buyer under the agreement, including any down payment. Section 12-620 states, "Notwithstanding any provision of an installment sale agreement to the contrary, a buyer may prepay at any time, without penalty, all or any part of the unpaid time balance payable under the installment sale agreement.” It then goes on to spell out the method for computing a refund of part of the finance charge.

Section 12-621 requires a holder within ten days after receipt of a written request from the buyer to deliver or mail to him a statement of the